Regular readers of my content know I often turn to classic rock lyrics to make an important point.

This tip title is taken from the Talking Heads song “Life During Wartime,” which examines survival in a post-apocalyptic, high surveillance environment. That frames my thoughts on where I think the industry currently stands in relation to the Federal Trade Commission’s recent guidance on advertising and pricing.

By now, you should all know that on March 13 the FTC reversed course on decades of advertising guidance when it sent letters to 97 dealer groups, advising them that their advertising practices may violate the law.

In short, the FTC has said that the advertised vehicle price must be the total price a customer is required to pay, excluding only governmental fees like taxes and registration. The FTC made it clear that it expects transparency regarding pricing.

Dealer resistance

I’ve been alarmed at the resistance I’ve encountered from many dealers.

I’ve received numerous calls from dealers asking how to circumvent this. Others claim that following this guidance will put them at a competitive disadvantage compared to dealers who don’t follow it.

While I’m sympathetic, I must be transparent and say that I agree with the FTC’s goal here. If you recall, a major impetus for the now set-aside Vehicle Shopping Rule was 39 consumer horror stories detailing personal, negative experiences in vehicle shopping, many of these involved final sale prices several thousand dollars higher than the advertised price.

It’s important that the industry take serious action before consumer advocates are once again in positions of power in Washington D.C., and resurrect the Vehicle Shopping Rule, or take it to an even more extreme.

This is not a test

Even more disturbing, in several dealer social media groups I follow, dealers have expressed the opinion that the FTC did this for show and doesn’t intend to take further action on this issue.

I strongly disagree with this assessment.

The letters sent make it clear that transparency is expected. In the last few years it has levied enormous fines against dealers (look up Lindsay Auto Group or Leader Automotive), largely for their pricing practices.

It even sent current FTC chairman Andrew Ferguson and Christopher Mufarrige, its Director, Bureau of Consumer Protection, to participate in a recent NADA webinar on this subject.

Perhaps more telling in my mind, it has set up a hotline to encourage both consumers and other dealers to report suspicious ads.

Act now before it’s too late

Now is the time to develop a plan for demonstrable compliance.

Review your advertising and marketing strategies and compare them to the letters.

Audit your closed deals to ensure the final pricing is consistent with advertising. Ensure your team (and service providers) know about this issue, receive adequate training, and pledge in writing to follow this guidance

This isn’t the time to fool around. Get serious. Keep calm and call Ignite.

Steve Levine is an auto finance lawyer with over 30 years of experience protecting car dealers and finance companies. He is the owner of Ignite Consulting Partners, which offers guidance on compliance, operations and best practices. He can be reached at [email protected]. He has authored two books on auto finance sales and compliance; Winning the Fight: A Guide to Protect Car Dealers, and Counterpunch: Compliance Strategies for Car Dealers. Both are available on Amazon. Follow Steve on Twitter @LawyerLevine for compliance and industry related content.